BUSINESS, INNOVATION AND SKILLS

EU Competitiveness Council

Vincent Cable: The EU Competitiveness Council took place in Brussels on 18 and 19 February 2013. Shan Morgan, Deputy Permanent Representative to the EU represented the UK for research items on 18 February, and I represented the UK for internal market and industry items on 19 February. A summary of those discussions follows.
	For research items, discussion focused on the 2013 annual growth survey and Commission recommendations on open access to scientific information.
	On the former, Research Ministers debated the Commission’s annual growth survey (AGS), one of a series of debates in sectoral Councils that will feed into a presidency report to the spring European Council. Commissioner Geoghegan-Quinn (Research and Innovation) argued that growth-friendly fiscal consolidation, which maintained or increased the share of public investment in research, education and energy, was essential and that national research funding could also be delivered more effectively. Member states broadly welcomed the AGS. The UK noted the importance of ensuring that the wider regulatory environment was conducive to innovative activity, and the need for a state aids framework for research and innovation that recognised the increased risks and costs associated with these activities (without undermining the internal market).
	On the latter, the Commissioner emphasised the importance of open access as a principle, noting that she felt that national approaches were too fragmented and that this was holding European researchers and industry back. Member states were united in agreement on the importance of open access to research publications, although there were clear differences in respect of levels of implementation.
	Under AOB, delegations received a short presentation on the biennial report of the high-level group on joint programming and Commissioner Oettinger (Energy) then provided a brief update on the international thermonuclear experimental reactor (ITER) fusion programme.
	There was a lunch-time discussion of the role of the research system and the research community in supporting smart specialisation led by Professor Mark Ferguson (Director-General, Science Foundation Ireland).
	The main internal market and industry issues discussed on 19 February were: the registration, evaluation and authorisation of chemicals (REACH), the entrepreneurship action plan and the European semester. A number of AOB points were also covered. Outside the Chamber, there was a lunch discussion on state aid modernisation and the signing of the unified patent court agreement.
	Council began with a policy debate on the review of REACH, the EU’s regulation on chemicals and their safe use. I and many member states intervened to stress the importance of adapting the system for small and medium-sized enterprises (SMEs), and the importance of reducing fees and cost-sharing. I also highlighted a number of examples where REACH had negatively impacted UK business. In addition to the review of REACH, the Council also discussed an accompanying paper on nanotechnologies. There was general support for the Commission’s approach to handle nanotechnologies within the REACH framework, although some countries suggested there might be a need for a separate regulatory structure in future. In line with several member states, I supported the Commission, stressing the importance of a risk-based approach.
	The next substantive item concerned the entrepreneurship action plan. Shan Morgan took the seat for this item. Generally, member states welcomed the action plan, with many stressing in particular the importance of access to finance and encouraging a more entrepreneurial spirit within Europe. The UK agreed with the initiatives presented, particularly those relating to access to finance and digital services, but highlighted that most activity in this sphere was for member states to undertake with the Commission’s role being to support and share best practice.
	The lunch discussion focused on state aid modernisation. The discussion focused on the question of regional aid and on the Commission’s proposal for a ban on aid to large enterprises in certain disadvantaged areas (“c” areas) in particular. Most member states, including myself, argued that a ban was unnecessary and would damage member states’ ability to promote growth. The Commission (Almunia) responded that he would no longer pursue a ban but that new compatibility conditions would have to be rigorously enforced if this aid was to be allowed to continue. I also expressed concern that the state aid approval process was too slow, unnecessarily delaying much needed Government interventions.
	Following lunch I, along with another 23 states, signed the unified patent court agreement. This international agreement is the final piece of the patent package agreed by the contracting states, and will come into force once ratified by at least 13 states.
	The final substantive agenda item was a discussion on the European semester, including the annual growth survey. Again, Shan Morgan took the UK seat. There was a full round-table on the subject with most member states (including the UK) focusing on the need for improved governance of the single market, the full implementation of the services directive and improved access to finance. The UK highlighted the creation of a single market centre in the UK to tackle problems here, and also suggested the Commission define a proportionality test to ensure that implementation of the services directive was more uniform across the EU.
	Several AOB items were discussed at the Council. The first concerned the European steel industry, an item requested by the Belgian delegation. Several member states intervened to stress the need for, and importance of, a native steel industry in Europe—with some going as far as suggesting state aid rules could be relaxed in this area. This suggestion was strongly countered by other member states. I intervened to stress that restructuring in the industry should be industry-led, and any role of Government should be in stimulating demand.
	The next AOB point was an item on the tobacco regulation, as requested by the Polish delegation. Some states were concerned that the proposal, to be discussed by Health Ministers, did not take sufficient account of the negative impacts on competitiveness. The UK did not intervene.
	The final morning AOB concerned general product safety. Some member states expressed concern about the introduction of a provision regarding product origin marking, while others came out in support of the Commission’s addition. Again, the UK did not intervene.
	The first afternoon AOB item concerned the Commission’s missions for growth initiative, where Commissioner Tajani described the trade/industry missions that he had recently undertaken. In this context, he had invited hundreds of EU companies to meet with presidents/senior Ministers of third countries and had signed 56 “non-binding” memorandums of understanding (MoU) on topics such as tourism, raw materials, space and SME co-operation. The UK called for the process to be more transparent, and that Council be informed before trade missions occur and before MoUs are signed.
	The final AOB item, and final item of the day, concerned the union customs code. The UK did not intervene on this information item.

ENERGY AND CLIMATE CHANGE

Renewable Heat Incentive Consultation (Government Response)

Gregory Barker: In July last year, I published a formal consultation setting out our ambition to introduce greater certainty and make improvements to the renewable heat incentive (RHI). Since then DECC has engaged extensively with stakeholders on our proposals and received over 100 responses to the consultation. The majority of responses agreed with our proposals for improving the scheme and welcomed the package of proposals.
	Today, I am pleased to announce the publication of the formal Government response to our consultation which sets out how we will provide certainty and scheme improvements by ensuring the scheme remains financially sustainable and offers good value for money for the taxpayer, meets previous commitments to introduce biomass sustainability by setting out sustainability criteria and air quality emissions limits, as well as enabling processes which will reduce administrative burdens to Ofgem and applicants. Copies of the response will be placed in the Libraries of both Houses.
	Budget Management
	To do this, DECC intends to introduce a degression-based approach similar to the regime adopted for the feed-in tariffs scheme. This will involve tariffs available to new applicants being gradually reduced if uptake of the technologies supported under the RHI is greater than forecast. This will be done by monitoring uptake on a quarterly basis against a series of “triggers”. Monthly updates on progress towards triggers will be published online and one month’s notice will be given before any reductions are made to the tariffs for new applicants.
	Tariff Reviews
	The new policy published today sets out the conditions under which tariffs may be reviewed and is now being implemented for the first time.
	Following work carried out by the Sweett Group for DECC on the initial assumptions and data used to set the current tariffs under the RHI non-domestic scheme, DECC is planning to consult in the spring on changes to tariffs and will provide an update shortly on which tariffs will be included. This is intended to increase uptake and ensure the scheme continues to provide value for money. DECC also intends to review the scheme in 2014 and 2017 to ensure the tariffs continue to be set using the best available data. It is DECC’s intention that where tariffs increase as a result of the current review, installations accredited from 21 January 2013—the date the possibility of review was published—would benefit from that increase once the new tariffs come into force.
	Biomass Sustainability
	We will improve performance by meeting our previous commitments to introduce sustainability requirements for all existing and new installations using solid biomass as a feedstock. This means that in order to be eligible for the RHI, biomass installations will be required to demonstrate, either through reporting or sourcing from an approved supplier, that their biomass meets a greenhouse gas lifecycle emissions limit target and—from no later than April 2015—land criteria. We will work with industry through the course of 2013 to promote early reporting on a voluntary basis and to develop the “approved suppliers” approach.
	Air Quality
	Air quality requirements will form part of the RHI for all solid biomass installations including CHP installations which burn biomass and this will apply to all new installations only.
	Metering
	Metering requirements will be simplified in order to move more RHI applications into the “simple” category—those which only need one meter—and introduce more flexibility into the “complex” category to avoid redundant meters being installed, to reflect feedback received from participants, and to reduce burdens on industry.
	These changes to both air quality and metering will come into force by autumn 2013 but we expect them to be in place no later than the end of 2013 subject to parliamentary process and will apply to all new installations only.
	I will lay the necessary statutory instruments to implement these changes before the House as soon as possible.

ENVIRONMENT FOOD AND RURAL AFFAIRS

Agricultural Council (Horsemeat Fraud)

Owen Paterson: I represented the UK at the first day of the 25 and 26 February Agriculture and Fisheries Council. Ministers from the devolved
	Administrations were also present. I also had an individual discussion with Commissioner Borg. I would like to update the House on the Council discussion on horsemeat fraud in advance of the normal report on the rest of the Council business.
	The Council had a wide-ranging discussion, following an update from the Irish presidency which summarised action to date, including the informal meeting of some agriculture Ministers which I attended on 13 February and the new EU-wide programme of testing of beef products for horse DNA and testing of horsemeat for phenylbutazone agreed on 15 February.
	Member states endorsed EU-wide action to address the issue through the testing programme and rapid sharing of information on wrongdoing. There was also widespread recognition that this incident arose as a result of fraudulent practices outside existing EU legislation. The Commissioner reminded member states that they have responsibility for official controls in the food chain and food businesses have primary responsibility for compliance.
	I outlined the urgent action the UK Government have taken to investigate the situation in the UK and noted that arrests have been made and investigations continue. I noted that the horsemeat fraud was a Europe-wide problem and urged all member states to share information rapidly in support of co-ordinated activity, including with Europol where appropriate in the case of active criminal investigations.
	I drew attention to the scale of product testing by food businesses in the UK, with over 3,500 processed beef products having been tested by 22 February representing over 90% of retailers’ own products and over 80% of products supplied by manufacturers, caterers and wholesalers, of which over 99% contained no horse DNA at or above 1%. I welcomed the EU-wide testing programme and the fact that it covers testing for “bute” in horsemeat for human consumption. I drew attention to our consideration of ways of improving the current horse passport system. I also drew attention to the need to look further at the issues of horsemeat imports from outside the EU and asked the Commission for more information on horse movements within the EU. I made clear I saw a need for the testing programme to extend for two months beyond the initial one month. I also made clear that while the testing programme is essential to give consumers a clear picture of the extent of the problem, it is food businesses which have the primary responsibility for verifying that food is of the right quality and is correctly labelled.
	I pressed the Commission, along with a number of other member states, to accelerate the production and publication of its report on extending mandatory country of origin labelling to meat in processed products and asked that this include a proper impact assessment so that we have evidence on the practicality and cost of extending mandatory origin labelling in this way and can avoid any unintended consequences.
	I made clear that as this is a Europe-wide problem, while we would want to learn the lessons from this episode in the UK once the immediate incidents have been resolved, there needs to be a lessons learned exercise at European level.
	The Commissioner for Health and Consumer Affairs undertook to try and speed up the report on mandatory origin labelling of meat in processed products but did
	not commit to a specific time scale. The Commission would prepare an overview report of member state official controls on hygiene, veterinary drugs and horse passports.
	The presidency concluded that many member states had called on the Commission to speed up delivery of the origin labelling report. I asked for this subject to be on the agenda of the next meeting of the Agriculture Council on 18 and 19 March.

Bovine TB

Owen Paterson: In October, I announced that the two badger control pilots that had been due to go ahead last autumn were being postponed at the National Farmers Union’s request. These pilots are part of the Government’s science-led and carefully managed policy to allow controlled culling of badgers, carried out by groups of farmers and landowners, to tackle TB in cattle. The policy is being piloted in two areas to test our assumptions about the effectiveness, humaneness and safety of controlled shooting.
	Prior to the decision to postpone the pilots, licences were issued to the companies carrying out the culls in the two pilot areas in west Gloucestershire and west Somerset. Today, Natural England has formally written to the two companies confirming the final conditions in these licences have been met, meaning that culling can go ahead there later this year. This demonstrates the commitment of all organisations involved to the successful delivery of the pilots in these two areas.
	At the same time, an area in Dorset will be prepared as a reserve. This is a sensible contingency in the event that, for any reason, one of the existing licensed areas is unable to proceed.
	I know that there is great strength of feeling on badger culling, but I also know that we need to take action now before the situation deteriorates even further. We need to tackle all transmission routes of TB using all the available tools.

TRANSPORT

Uninsured and Untraced Drivers' Agreements (Review)

Stephen Hammond: The Department has today published a consultation paper on our review of the uninsured drivers’ agreement and untraced drivers’ agreements, which the Secretary of State for Transport is a party to with the Motor Insurers’ Bureau (MIB).
	These agreements provide a framework within which the MIB investigates claims and provides compensation to victims of accidents occurring in Great Britain and caused by uninsured or untraced drivers. They are updated periodically to ensure that they are fully up to date and provide appropriate compensation for claimants in accordance with EU and UK law. The current uninsured and untraced agreements date from 13 August 1999 and 7 February 2003 respectively. We have worked with the
	MIB, as the other contracting party to the agreements, in this process of review to see what amendments are necessary.
	We need to ensure these agreements are compliant with the law but also as straightforward as possible in their drafting—making them easy to understand and apply. It should be borne in mind that, ultimately, premium-paying motorists bear the costs of all claims investigated and paid under these agreements.
	The consultation documents can be found on the Department’s website. An electronic copy has been lodged with the House Library.

WORK AND PENSIONS

Employment, Social Policy, Health and Consumer Affairs Council

Mark Hoban: The Employment, Social Policy, Health and Consumer Affairs Council will be held on 28 February 2013 in Brussels. I will represent the UK.
	The council will finalise its contribution to the European Council, which will take place on 14 and 15 March 2013. There will be a discussion on the European semester 2013 focusing on the priorities for action highlighted in the annual growth survey (AGS) and joint employment report. The Government support the five priority areas identified by the AGS.
	There will be a general approach on the guidelines for the employment policies of the member states and an endorsement of the key conclusions and policy messages on the social situation and trends to watch in the European Union. Finally the presidency will report on preparation for the tripartite social summit meeting.
	Ministers will also consider a Council recommendation on establishing a youth guarantee for political agreement and the Commission will report on their communication on the social investment package.
	Under any other business the presidency will provide updates on legislative and other issues, the Employment Committee and Social Protection Committee will outline their work programmes for 2013, and the Employment Committee will report on its meeting with social partners on wage developments. Finally the Commission will update Ministers on the transitional arrangements regarding free movement of workers of Bulgarian and Romanian nationals.